Capital markets to 2030 global re alignment

optimis-Between 60% and 70% of survey respondents expect that by 2030 global capital markets will have each of greater depth, efficiency, and liquidity.. Investors remain justifiably con

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Since it’s launch in February 2012, Deutsche Asset &

Wealth Management’s Global Financial Institute (GFI) has brought professional investors a wealth of insights into some of the deep economic, financial, and social themes of our world today and beyond Its inclusive research partnerships with some of the world’s most renowned professional and academic subject-matter-experts gives its publications unique breadth of per-spective, depth of analysis and, as a forward-thinking institution, length of horizon

Today, I am proud to introduce you to the “Capital Markets 2030” series, a collaboration between GFI and the Economist Intelligence Unit (EIU), aimed at offer-ing readers an educated look into the global invest-ment landscape of tomorrow This series of publica-tions seeks to answer some of the big questions that all investors probably ask themselves about the road ahead How will demographic shifts impact the capi-tal markets of developed economies? What is the like-lihood of our generation experiencing another finan-cial crisis during its lifetime? What are the biggest risks and opportunities to be highlighted in emerging capital markets? How about frontier markets such as

Message from Asoka Wöhrmann

Africa? And, particularly of interest for the wealth ment sector, what implications do the next two decades hold for wealth succession?

manage-With the financial crisis now behind us, it is time to look past the current haze of economic uncertainty to make informed, strategic, long-term plans for our companies and our portfolios “Capital Markets 2030” helps you do so

by providing you with the coordinated research of experts

in both Deutsche Asset & Wealth Management and EIU, based in no small measure upon global interviews and sur-veys of hundreds of C-level executives such as Jim O’Neill, academics such as Prof Barry Eichengreen (who also hap-pens to be on the board of Global Financial Institute), regu-lators, and others who will influence the future of capital markets All signs point to a major realignment of global markets in the coming decades Where will you be, and where will your money be, when that happens?

With these thoughts in mind, I invite you to take full tage of the rich and relevant content this series has to offer

advan-2030 may not be right around the corner, but it is close enough to affect our financial decisions today

Happy reading, Yours truly,

Dr Asoka WöhrmannCo-Chief Investment OfficerDeutsche Asset & Wealth Management

Table of contents

Executive Summary 05

About the Research 07

1 Introduction: Facing the future positively but warily 09

1.1 Hopeful but guarded 09

1.2 Exploring uncertainties rather than making predictions 11

2 Uncertainty I: The future of globalisation 13

3 Uncertainty II: The impact of changing eco-nomic geography 15

3.1 More money in emerging markets 15

3.2 The implications 15

4 Uncertainty III: Whither regulation? 19

4.1 The prospects for regulatory convergence 19

4.2 Getting regulation right 20

5 Uncertainty IV: The shape of the market 21

5.1 Evolving marketplaces 21

5.2 Technological surprises in store? 22

5.3 A different mix of securities 23

5.4 A changing mix of strategies 24

5.5 Why sustainability is important for investors 26

6 Uncertainty V: From where will the next crisis come? 27

6.1 Government debt 27

6.2 Inflation 28

7 Conclusion 30

About the Economist Intelligence Unit

The Economist Intelligence Unit (EIU) is the world’s leading resource for economic and busi-ness research, forecasting and analysis It provides accurate and impartial intelligence for companies, government agencies, financial institutions and academic organisations around the globe, inspir-ing business leaders to act with confidence since

1946 EIU products include its flagship Country Reports service, providing political and economic analysis for 195 countries, and a portfolio of sub-scription-based data and forecasting services The company also undertakes bespoke research and analysis projects on individual markets and busi-ness sectors The EIU is headquartered in London,

UK, with offices in more than 40 cities and a work of some 650 country experts and analysts worldwide It operates independently as the busi-ness-to-business arm of The Economist Group, the leading source of analysis on international business and world affairs

net-This article was written by Dr Paul Kielstra and edited by Brian Gardner

Economist Intelligence Unit He has written on

a wide range of topics, from the implications of political violence for business, through the eco-nomic costs of diabetes HIs work has included

a variety of pieces covering the financial services industry including the changing role relationship between the risk and finance function in banks, preparing for the future bank customer, sanctions compliance in the financial services industry, and the future of insurance A published historian, Dr Kielstra has degrees in history from the Universi-ties of Toronto and Oxford, and a graduate diploma

in Economics from the London School of ics He has worked in business, academia, and the charitable sector

Thought Leadership Team His work has covered a breadth of business strategy issues across indus-tries ranging from energy and information tech-nology to manufacturing and financial services In this role, he provides analysis as well as editing, project management and the occasional speaking role Prior work included leading investigations into energy systems, governance and regulatory regimes Before that he consulted for the Commit-tee on Global Thought and the Joint US-China Col-laboration on Clean Energy He holds a master’s degree from Columbia University in New York City and a bachelor’s degree from American University

in Washington, DC He also contributes to The Economist Group’s management thinking portal

Introduction to Global Financial Institute

Global Financial Institute was launched in ber 2011 It is a new-concept think tank that seeks

Novem-to foster a unique category of thought leadership for professional and individual investors by effec-tively and tastefully combining the perspectives of two worlds: the world of investing and the world

of academia While primarily targeting an ence within the international fund investor com-munity, Global Financial Institute’s publications are nonetheless highly relevant to anyone who is interested in independent, educated, long-term views on the economic, political, financial, and social issues facing the world To accomplish this mission, Global Financial Institute’s publications combine the views of Deutsche Asset & Wealth Management’s investment experts with those

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institutions are hundreds of years old, the fect place to go to for long-term insight into the global economy Furthermore, in order to present

per-a well-bper-alper-anced perspective, the publicper-ations spper-an

a wide variety of academic fields from nomics and finance to sociology Deutsche Asset

macroeco-& Wealth Management invites you to check the Global Financial Institute website regularly for white papers, interviews, videos, podcasts, and more from Deutsche Asset & Wealth Manage-ment’s Co-Chief Investment Officer of Asset Man-agement Dr Asoka Wöhrmann, CIO Office Chief Economist Johannes Müller, and distinguished professors from institutions like the University of Cambridge, the University of California Berkeley, the University of Zurich and many more, all made relevant and reader-friendly for investment profes-sionals like you

Capital markets link savings and investment, making them uniquely vital to economic growth The coming decades will see a major realignment of global markets but some surprising continuity as well As emerging markets become more important, developed markets will show unexpected resilience with global investors cautious in the face of uncertainty This Economist Intelligence Unit study spon-sored by Deutsche Asset and Wealth Management takes a longer view, considering how the world’s capital markets might evolve to 2030 In so doing, it aims to shed light both on how the industry expects a range of today’s issues

to play out, as well as – crucially – some of the potential implications of such developments for tomorrow It draws

on a detailed survey of 353 senior executives from nies active in capital markets; in-depth interviews with 16 experts, corporate leaders, and senior executives; as well as substantial desk research Its key findings include:

compa-Those involved in capital markets are guardedly tic despite the global financial system’s unresolved risks

optimis-Between 60% and 70% of survey respondents expect that

by 2030 global capital markets will have each of greater depth, efficiency, and liquidity In every case, only 10% or fewer foresee deterioration Investors remain justifiably concerned, with 65% of survey respondents stating that increased regulation to capital markets since 2008 has not addressed underlying risks to the system Magnus Böcker, CEO of the Singapore Exchange, reflects the general mood:

“I am very optimistic about what I can see happening and about what capital markets could do When I say that, though, [I am aware that] it will be a bumpy road with its fair share of up and downturns.”

The stalled globalisation of capital markets is likely to resume at a slower pace than pre-crisis, but downside risks remain: Data from the Economist Intelligence Unit and

McKinsey Global Institute show that foreign direct ment and broader international capital flows remain sig-nificantly down from pre-2008 levels – in the latter case by 61% in 2012 Most experts eventually expect a resumption

invest-of financial integration, albeit at a slower pace than before Similarly, survey respondents predict greater integration

of capital market institutions, although typically at the regional rather than global level

Contrary to popular expectations, the United States will remain the world’s leading financial power This is despite

a major shift towards the capital markets of emerging economies Respondents expect that having substantial investments in emerging markets will become the norm: the proportion with under a quarter of assets invested in these economies is expected to plummet from 60% today

to 24% by 2030 At the same time, those surveyed say that

by then the United States, China, and India will have the foremost equity markets, and the US, China, and Japan the most important debt ones A slim majority (54%) also expect the American dollar to remain the global reserve currency through the coming decades

As the challenge for regulators moves toward tation of the large and complex new rules devised since

implemen-2008, survey respondents expect informal, regional vergence: Informed observers speak about both the sub-stantial progress made in devising new regulation since the Global Financial Crisis and the extensive work that remains unfinished Many agree, however, that implemen-tation is now a major priority Most survey respondents believe that the process will lead to regulatory conver-gence at a regional level rather than a global one and that this will happen through cooperation or extraterritorial legislation instead of formal agreements One perhaps sur-prising driver of convergence should be the competitive

con-Capital markets to 2030:

Global re-alignment

A Global Financial Institute research paper written

by the Economist Intelligence Unit November 2013

Written by

Executive Summary

advantage for markets that strong regulation is seen to bring As Isabelle Vaillaint, director of regulation at the European Banking Authority, puts it, “Before the crisis, competition in regulation was toward laxer rules Now it

is going the other way.” On a darker note, several experts expressed concern that the current political environment might lead to irrational regulation harmful to the industry

Respondents predict that exchanges will be dominated by regional and global players trading a wider range of securi-ties than today: As a fixed cost industry, bigger is cheaper for exchanges, but most respondents foresee the market being shaped by a mix of regional and global exchanges for both equity and debt in 2030 This reflects demand:

small and medium sized companies tend to tap local capital markets and many investors have a home coun-try bias Meanwhile, while respondents see off exchange equity investments becoming more attractive faster than publicly traded shares, they also foresee growth in inter-est in exchange traded government and corporate debt

Robert Greifeld, CEO of NASDAQ-OMX calls this part of a broader shift “We see exchanges evolving to include more and more asset classes,” because of growing regulation on transparency and the liquidity benefits such markets bring

Technological surprises are likely according to those veyed: Sixty-six percent of respondents believe that IT will create new business models for aggregating capital or link-ing up counter-parties Moreover 41% agree that new tech-nology will make it harder to regulate international capital

sur-transactions, compared to only 23% who disagree Experts interviewed for the study, though, are split Some point to innovations such as peer-to-peer lending as being poten-tially very disruptive Others stress that predictions of technological disintermediation of financial markets have been around for years and never come to pass because of the value intermediaries can bring

Survey respondents have substantial concerns about ernment debt and the potential for renewed inflation in the coming year: Over half believe that government debt

gov-is “very likely to have a debilitating effect” on national capital markets in all of Germany, France, the United King-dom, China, India, Brazil and Japan before 2030; more than three-quarters say the same of the United States Majori-ties also expect American and Chinese debts to have such

an impact on international markets Most experts edge the potential danger of elevated national debt levels but a number point out that uncertainty over its precise economic impact means it might prove not to be such a major problem Meanwhile, more than four in 10 respon-dents say that each of US dollar, the Chinese renminbi, and the euro will see inflation levels which will have a substan-tial negative effect on international markets by 2030 EIU projections are much more benign, but any rise in inflation

acknowl-as economies recover, if not carefully watched, carries the potential to grow uncontrolled

The report is based on a survey of 353 senior executives from companies active in capital markets Of these, 47%

are asset managers or institutional investors (These are roughly evenly divided by size, with 32% managing under

$10 bn in assets, 36% managing between $10 bn and $50

bn, and the rest managing over $50 bn) The remaining respondents are from companies that provide non-finan-cial goods and services (32% of the total) and banks or licensed deposit takers (22%) These latter types of compa-nies also include a range of sizes, with 57% having annual incomes of over $500 m, and 26% over $5 bn The survey sample is senior, with 57% C-level or above Respondents are also distributed globally, with 32% based in the Asia-Pacific region, 30% in Europe, and 22% in North America, with the remaining 16% from the rest of the world In addi-tion, the EIU conducted 16 in depth interviews with leaders from stakeholder companies and organisations – including investment firms, banks, regulatory agencies, exchanges, and international associations – as well as academic and other experts as well as substantial desk research

The Economist Intelligence Unit would like to thank the lowing participants in the interview programme for their time and expertise:

fol-Magnus Böcker, CEO, Sinagpore Exchange

Julian Callow, Chief International Economist, Barclays

Stephen Cecchetti, Head of Monetary and Economic Department, Bank for International Settlements

Ranu Dayal, Senior Partner, Boston Consulting Group, Delhi

Romain Devai, Research Manager, World Federation of Exchanges

Richard Dobbs, Director, McKinsey Global Institute on ital Markets

Cap-Bernard Dumas, Professor of Finance, INSEAD

Barry Eichengreen, Professor of Economics and Political Science, University of California, Berkeley

Thomas Finke, CEO, Babson Capital

Robert Greifeld, CEO, NASDAQ-OMX

Ian Linnell, Global Analytical Head, Fitch Ratings

Jim O’Neill, Retired Chairman, Goldman Sachs Asset Management

James Poterba, Professor of Economics, Massachusetts Institute of Technology

Isabelle Vaillant, Director of Regulation, European Banking Authority

Nigel Vooght, Global Leader, Financial Services, PricewaterhouseCoopers

David Wright, Secretary-General, International tion of Securities Commissions

Organisa-About the Research

If money is the lifeblood of the economy, then capital kets are its essential circulatory system Their primary role

mar-is simple: “channelling savings to investment” to use the words of Ranu Dayal, a senior partner in Boston Consult-ing Group’s Delhi office The search for ways to do this has, however, created a complex web of stakeholders, institu-tions, regulators, and even personal relationships These

in turn interact on a vast array of financial instruments ranging from straight-forward equities, through arcane derivatives, to online negotiated peer-to-peer contracts

The collective assets within this system are huge The national Monetary Fund’s most recent estimates, for late

Inter-2011, put total global equity, debt, and bank assets at just under $260 trillion, or 369% of world GDP McKinsey, a con-sultancy, relying on different data, puts the figure for 2012

at a somewhat lower but still substantial $225 trillion

When all goes well these capital markets undergird nomic growth and development The recent Global Finan-cial Crisis is a stark reminder, however, of the damage that occurs when this circulatory system seizes up As Bernard Dumas, professor of finance at INSEAD, puts it, “Capital markets are largely the advance reflection of the economy.”

eco-This study – relying on a survey of 353 senior executives from companies active in them; in-depth interviews with

16 experts, corporate leaders, and senior officials from

important market institutions; as well as substantial desk research – considers how these essential markets are likely

to develop Rather than focussing on immediate lenges, however, it seeks to take a longer view, considering ways in which they might evolve between now and 2030

chal-1.1 Hopeful but guardedThe good news is that, despite the difficult period through which the financial system has recently passed – and the issues it continues to navigate – survey respondents are positive about the long term Sixty-two percent expect that

by 2030 global capital markets will be deeper, 63% say they will be more efficient, and 70% predict increased liquidity Only small minorities foresee deterioration in these areas

None of these developments is given Although depth and liquidity are difficult to measure at the global level, IMF data

on global assets as a percentage of GDP – a proxy for the former – have gone up and down with developed world economies over the last decade rather than heading in any particular direction (see chart) Similarly, a European Cen-tral Bank analysis which considered different ways to look

at financial market liquidity found that one measure – the illiquidity ratio – showed a positive shift in leading devel-oped and emerging economies between the late 1990s and 2005 Thereafter, though, it revealed an underlying

How do you expect global capital markets overall to change in the following areas by 2030?

1 Introduction: Facing the future positively but warily

stasis punctuated by negative reactions to crises.1 Nevertheless, many are confident that economic growth in emerging markets and the recovery of developed ones will eventually improve capital markets Nigel Vooght – global leader for Financial Services at the PwC – holds that “There

will be increasing depth, liquidity, and efficiency because

of those issues The pessimism is about the timing.” Thomas Finke, CEO of Babson Capital, an investment firm, is also hopeful thanks to greater openness in emerging markets, technological advances and even the impact of recent

1 “Global Liquidity: Concepts, measurements and implications from a monetary policy perspective” ECB Monthly Bulletin, October 2012

Global capital assets as a percentage of GDP

Source IMF

financial turmoil “Coming out of this crisis, the lessons learned will make financial institutions and investors more aware of risks and more transparent,” he says

However upbeat, survey respondents also remain guarded

They see significant potential current dangers: 65% say that increased regulation to capital markets since 2008 has not addressed underlying risks to the system, and those surveyed are almost evenly split on whether current metrics and models are sufficient to address systemic risks effectively

Looking at the period between now and 2030, the leading risk they most frequently mention for those tapping into global markets is a renewed global economic or financial crisis (cited by 45%) For investors, the bigger worries are asset bubbles (45%) as well as financial crises (36%) Some

of this optimism may arise from the long time horizon from now to 2030 Romain Devai, who leads the research team

at the World Federation of Exchanges, says “We certainly hope for greater depth, efficiency, liquidity and transpar-ency, but have serious concerns about the extent that is really happening at the moment.”

1.2 Exploring uncertainties rather than making predictions Such uncertainty highlights a requirement of any exami-nation of how global markets might evolve over time: the need to avoid hubris The 17 years between now and

2030 is a long period for markets If we were looking to today from the same distance in the past, in 1996, only a rare analyst could have foreseen any of the Asian financial crisis, the dot com bubble, and the Global Financial Cri-sis, let alone all three For instance, IMF’s key policy issues report on capital markets that year dwelt on the dangers of

Do you agree or disagree with the following? Please select one for each row

Current metrics and models are sufficient to effectively address systemic

risks (eg, Value at Risk)

foreign exchange risk to systematically important tional banks.2

interna-Instead of attempting to predict the next asset bubble, this study will examine key uncertainties confronting capital markets in the coming decades as they are identified by the survey respondents and expert interviewees The analysis

focuses on the growth of emerging markets, the evolution

of regulation, and the way the marketplace – especially exchanges – will likely develop This analysis, in turn, will indicate the likely contours of development of capital mar-kets over the long term, as well shedding light on the cur-rent challenges facing capital market stakeholders

2 International Capital Markets: Developments, Prospects, and Key Policy Issues, 1996

investing in international capital markets between now and 2030? Please select the top three.

accessing capital from international capital markets between now and 2030? Please select up to

Deflation Natural disasters Legal/regulatory risk Armed conflict Other, please specify

Sovereign debt crisis

Inflation Regional economic/financial crises

Currency volatility Armed conflict Natural disasters Legal/regulatory risk Other, please specify

For years conventional wisdom considered ever greater globalisation the inevitable direction of travel for capital markets Now, though, notes David Wright, Secretary-General of the International Organisation of Security Commissions, “One thing which is becoming less sure is how global will we be Is there a retrenchment from what

we were seeing?” DHL’s annual Global Connectedness Index – which measures the depth and breadth of glo-balisation – in December 2012 reported ongoing “capital market fragmentation” which had grown worse since 2008 rather than improving One heartening aspect of the cri-sis has been the degree to which countries have resisted protectionist impulses however, new capital regulations which the US Federal Reserve are looking to implement on foreign banks operating in the country may, in the words

of the Economist, have a “chilling effect…on cross-border banking almost everywhere.” Jim O’Neill – who recently retired as chairman of Goldman Sachs Asset Management and coined the term “BRICs” – is less than sanguine “I think probably the biggest uncertainty about the future of capi-tal markets is whether globalisation itself will survive the challenges since 2008 Frankly it is very hard to tell.” He notes that, while emerging markets still view the phenom-enon positively, “Since 2008 many western countries are full of self-doubt and self-pity Globalisation is in retreat and taxpayers resent bailing out their own banks, never mind ones in other countries.” Financial globalisation and integration are likely to continue slowly but are no longer

the sure bets they once seemed

Economic data also point to a slowing – and in Europe a reversal – of financial integration in recent years Global foreign direct investment (FDI) fell by 43% between 2007 and 2009, according to EIU figures Although there has been some recovery in absolute terms, as a proportion of GDP, FDI remains well below the pre-crisis peak [see chart] McKinsey Global Institute data on broader cross-border capital flows – including lending, FDI, and foreign portfolio investment – tells an even more striking story These flows – a useful proxy for financial integration – dropped 86% during the crisis and by 2012 remained 61% below their

2007 peak

The potential for worse to come certainly exists Mr O’Neill notes that globalisation is a function of policy decisions and the current fashionable hostility to financial institu-tions could lead to poor policy choices He adds, “If the

US economy goes into semi-Japanese coma for a long time,” that country’s government might act in ways which impede global integration Another danger, says Richard Dobbs, director of the McKinsey Global Institute, is that governments with large debts “may worry about an exit of capital and bring in closet protection, dressed up as con-sumer protection, in order to force capital to build up close

to home.”

Global FDI as percentage of GDP

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0

Source EIU

2 Uncertainty I: The future of globalisation

Overall, though, few see the world ready to abandon cial globalisation wholesale Mr Dobbs thinks that a more likely explanation of the data is that “we are back in line with the long term trend line [of increasing financial inte-gration] and have blown off the froth” that developed in the heady days before 2008 In parallel, Julian Callow, chief international economist, Barclays states, “You could argue that just before the crisis there was insufficient awareness

finan-of risk, so some finan-of the flows went too far.” The resultant losses, he adds, have led to some domestication of capital, but over time, with a better understanding of risk, the pro-cess should revert

Just as important is continuing investor interest in foreign markets Robert Greifeld, CEO of the NASDAQ-OMX mar-ket, calls it “important to recognise that first and foremost investors have become global and can access markets globally.” Moreover, Mr Finke believes, “investors in the last five years have been looking to be more international

in their portfolios That is a process.” In the short term, he adds, European issues or low returns in some countries might constrain such activity, but “the desire to diversify

is there Relative value across different markets will dictate timing, but the trend isn’t ending.”

Survey data also indicates that respondents see slower

globalisation rather than a reversal They expect some internationalisation of various aspects of capital markets

by 2030 including, where people will invest, the nature

of regulation, and the level at which exchanges operate These views give a collective impression that respondents see steady coalescing of markets at a regional – and to some extent world level – rather than a resumption of the speedier financial globalisation of the past

A closer look at the McKinsey data supports this view Most

of the global drop in capital flows comes from European banks and other investors there re-domesticating assets

in the face of perceived higher risks within the continent

By contrast, capital flows to and from emerging markets have largely recovered their pre-crisis levels Any apparent reversal of financial globalisation, then, likely results from very specific causes limited to a particular geographic area Stephen Cecchetti, head of the monetary and economic department at the Bank for International Settlements says that “Europe has been a special case where people have been concerned with matching books within European countries Even there, the risks of re-denomination have receded substantially.”

Globalisation may be limping, but it is far from dead

1 Includes foreign direct investment, purchase of foreign bonds and equities, and cross-border loans and deposits.

nomies) For countries without quarterly data, we use trends from the Institute of Intgernatinal Finance

3.1 More money in emerging marketsThe dramatic growth of developing economies, nota-bly those of the Asian giants China and India, have been reshaping much of the world economy for several decades Capital markets are no exception Mr Vooght calls today’s “biggest shift in capital markets the one

to emerging markets, particularly the SAAAME (South America, Africa, Asia and the Middle East) countries.” To take just one measure, according to the World Federation

of Exchanges (WFE), between 2002 and 2011 the level of domestic market capitalisation held by Asian exchanges outside of Japan rose from 9% to 21% of the global total

The equivalent numbers for Latin America are 1% and 5%

Increased investment in emerging markets will drive this trend further Survey respondents expect their average assets under management in these countries to rise from 26% currently to 39% by 2030, growth which will come from investors in all global regions Even more important than the average increase will be a shift in what is normal

Today 60% of respondents say that under a quarter of the assets they manage are invested in emerging markets

By 2030, that proportion is expected to decrease to 24%

Those with a small stake will become the exception

3 Uncertainty II: The impact of changing economic geography

Mr Finke is already seeing such a shift Since the economic crisis began, risk-reward calculations are different, he says

“The mind-set has changed Now people worry about ruptcies in Spain, not Brazil.” In his own company, he adds,

bank-“Before the crisis, we made investments in the Asia Pacific region on an opportunistic basis Since then we have focused

on growing our investment operations in Australia and Asia

to complement our long time presence in the US and Europe

We are intent on being a truly global firm.” Looking ahead, Magnus Böcker, CEO of the Singapore Exchange, sees sub-stantial drivers of future growth for capital markets in the developing world, particularly in Asia On that continent, “in under 20 years, 2.5 bn people are coming into the middle class We can cater to their needs only if we get resources

to the right places [for economic growth and infrastructure building] This is what financial markets are all about It is an underestimated challenge.”

3.2 The implications

“The unanswered question,” arising from the growth of these markets, says Mr Vooght, “is what it means in terms of their power.” Ian Linnell, global analytical head at Fitch Ratings, expects “a shift in dynamics and a slow erosion in the impor-tance of traditional capital markets at expense of new ones.” WFE figures show that this change too has already begun

What proportion of the assets you manage are currently invested – as equity or debt instruments – in countries presently considered emerging markets and what proportiondo you expect in these coun-tries in 2030?

While exchanges in the developed world continue to dominate in terms of market capitalisation, the organisa-tion reports that in 2012 the National Stock Exchange of India had the greatest number of electronic order book share trades worldwide and the Shanghai and Shenzhen exchanges saw the fourth and fifth highest levels of trad-ing by value globally Between 2009 and 2011, accord-ing to Dealogic, the latter two were also in the top five

of exchanges for initial public offerings by value, and in

2012 remained in the top 10 Mr Devai says of the Chinese exchanges in particular “Because of the size of the country, they are already huge If they become international, they will immediately become regional, if not global, actors.”Those surveyed expect that emerging market exchanges will solidify their places among the world’s leaders The most common choices among respondents for which

mar-kets for the global economy by 2030? Please select up to three.

global economy by 2030? Please select up to three

Brazil Germany France Italy Other, please specify Capital will be so international that location will have little relevance